38 Responses

I like the Fair Tax. If you simultaneously eliminate the income tax and instate the Fair Tax and pass a Constitutional amendment that overrides the 16th amendment as being immoral then its a much better idea. Taxing income is immoral, thats why I don’t support the Flat Tax.

I prefer the Fair Tax because everyone would pay the tax, regardless of whether they are employed in the US, working off the books, an illegal alien, a drug dealer or a tourist. Mind you, all these groups still use many of the services available to American’s, like schools, hospitals, roads and highways.

However, I do agree with you with regard to not trusting the government to phase out Income Tax. The government is parasitical. It sells nothing, but takes everything. Once it got the taste of other people’s money, it was hooked like any other addict. I’m afraid there is no going forward or back to normality.

[…] restraint is a necessary precondition for any pro-growth tax reform. If given a choice between a flat tax, national sales tax, value-added tax, or the current system, many Americans want reform, but it is very difficult to have a good tax system if the burden of […]

[…] restraint is a necessary precondition for any pro-growth tax reform. If given a choice between a flat tax, national sales tax, value-added tax, or the current system, many Americans want reform, but it is very difficult to have a good tax system if the burden of […]

I prefer a flat corporate tax of 15% and abolish all forms of income tax, sales tax, capital gains tax, estate taxes, and all extraterritorial taxation. I would also suggest the US part take in unilateral free trade and make the entire USA a free trade zone in spite of whatever our trade partners policies maybe me.

In other words I prefer growth and opportunity with some risk, rather than stagnation and immobility that provides a safety net full of holes in it.

Clearly the moderator is attempting to appear to subscribe to ‘fairness’ which the new proposals are NOT!

What is being advocated in all instances is a tax on CONSUMPTION.

Adam Smith, known as the Father of Captialism, wrote in his seminal work, An Inquiry into the Nature and Causes of the Wealth of Nations, from Book V, Chapter 2, Article I:

“The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess.”

A Consumption tax in any of it’s many forms, sales tax, value-added-tax, fair tax is REGRESSIVE.

The Middle Class and the poor will pay FAR more of their income in these taxes than the wealthy. It is Common Sense and these ‘plans’ are simply a ploy to make the rich richer by not paying tax on the vast majority of their wealth.

No,
they are a ploy to get middle and lower income voters to contribute to the government coffers (i.e. the collective management of wealth) while still being able to hypocritically claim that campaign promises with regards to not increasing the tax burden on the poor and middle class are being adhered to.

This is because you can only tax rich people so much through progressive taxes before significant numbers of them either drop out of the workforce or settle for more modest financial aspirations. Then you not only loose the taxes they pay, but their high value products and services too – and that is, by far, the biggest loss for the public.

So, in a nutshell, progressive income taxes are already squeezing the rich to the point where further increases in taxation will not yield more money for the government (in the mid and long term that is – it takes a bit of time for the rich to modify their behavior in response to changes in the tax burden and for the effect to be felt on GDP). So the only other option left for the government in order to increase its revenue (and spending) past the current 3.5 trillion annual level, is to also start taxing the middle class and the poor. Hence the emerging proposals for VAT, sin taxes, carbon taxes and other indirect taxes that can be hidden so that the “no new taxes for the middle class” campaign promises are not so blatantly violated.

Fair Tax, Flat Tax will hurt both poor and middle class. The rich will love it. The poor need every penny for living expenses. The middle class needs 70% of income for living expenses. The truly rich can get by on 5%-10% of their income for living expenses. If they are truly rich even less. I have no lobby working for me to change laws but rich people do. We need to go back to 1979 max income tax rates of 70%. It could be graduated up to 100 million. The CEO’s making the biggest increases this year are the ones that got rid of the most American workers so their profit could soar. Most Americans still think that Free Trade is good, but it has cost me over $10,000,000. since 1980, when I was in the diamond wholesales business. Free Trade is not free and these ideas are truly biased for the rich.
Ron

[…] an ardent defender of sales tax proposals such as the FAIR tax because it would be a great idea to replace the current system with any low-rate system that gets rid of the tax bias against saving and…. I even narrated this video explaining that a national sales tax and flat tax are different sides […]

Person 1 earns 25,000 a year. Person 1 pays 500 dollars a month for rent, 200 for food, 200 for utility bills (phone, electricity, heating), 100 for bus pass/train pass, for a total basic expenditure of 1000 per month. A flat tax on his total income of what, 15%, 10%, 12% would be another 257 each month. This leaves Person 1 with less than half of their total income per month, just about 825 dollars. Notice I did not include any costs for spouse, children, clothing, student loan payments, health insurance costs, car payments, car insurance, or savings. Let alone spending money for normal consumer expenditures like entertainment, Christmas shopping, Friday night movies, Monday night football with the guys, getting your nails or hair done with the girls.

Person 2 earns 250,000 a year. Person 1 spends 2250 for a studio apartment in lower Manhattan, however, still probably only spends 200 dollars on food, 200 for utility bills, 100 for the subway pass, apply that same flat income tax (averaged at 12.33%) and he will pay a much greater amount of 2568. This still leaves Person 1 with 15515.33 left over for the month. Again I am not factoring in any peripheral expenses.

So clearly, the 12.33% flat income tax has a much greater impact on Person 1 than Person 2. I think that is discriminatory.

Furthermore, since Person 2 has a greater disposable income, it is likely that Person 2 has a greater ability to use that income to make investments. These investments, if safe, are likely to bring a return. So on top of Person 2’s earned income of 250k you can assume that there are additional incomes collected. Are these additional incomes not earnings that would be taxed as interest, dividends, rental property income, etc? If either Person 1 or Person 2 suddenly earned a windfall inheritance does that count as income to be taxed?

Isn’t it more fair to say that it is discriminatory against Person 1 to charge him the same flat tax as Person 2?

This is a honest scenario and I want to know if what I understand as a flat tax is in fact true. I really would like if anyone can respond for insight and to correct anything (including my math) that I stated about flat tax.

[…] an ardent defender of sales tax proposals such as the FAIR tax because it would be a great idea to replace the current system with any low-rate system that gets rid of the tax bias against saving and…. I even narrated this video explaining that a national sales tax and flat tax are different sides […]

[…] If you want short and sweet descriptions of the major tax reform plans, here are four highly condensed descriptions of the flat tax, national sales tax, value-added tax, and current system. Rate this:Share […]

[…] If you want short and sweet descriptions of the major tax reform plans, here are four highly condensed descriptions of the flat tax, national sales tax, value-added tax, and current system. Like this:LikeBe the […]

[…] For those not familiar with the lingo, a “flat tax on consumption” simply means a tax system with one rate and no double taxation of income that is saved and invested. That can be a national sales tax or value-added tax, but it usually refers to the “Hall-Rabushka” flat tax championed by Dick Armey and Steve Forbes. If you want more information, click here and here. […]

The Fair Tax is the best of the available tax reform proposals. It will, as noted, require an iron-clad mechanism to kill repeal the 16th amendment and close the door to any attempt by an out of control elite political class to have both an income tax and a sales tax. This can be done and it will , upon passage of the FairTax, require an unrelenting perseverance by the American people to be sure it happens. The argument that the ‘possibility’ for both an income tax and a sales tax to exist is a weak excuse for not advocating for a legitimate and practical solution to the abuses of the IRS and a tax drunk government.

I couldn’t agree more with Alan Ramsay’s comment above. The Fair Tax plan (HR-25, S-122) is the most-researched tax reform proposal in front of Congress and we must push the House Ways & Means Committee and the Senate Finance Committee to pass it.

Dan Mitchell: You work at allegedly a “Libertarian” think tank. Yet you don’t even know WHY the Founders rejected income taxation and the federal direct taxation of citizens. Wow! The correctly saw big brother, Gestapo, KGB, IRS or whatever-the subjugation and intimidation of citizens that has always occurred in human history when governments knew your income and assets information. Having that info is more powerful than having the info on your sex life. And when any national government has all of your personal financial info, that ANY Flat Rate or Progressive Rates Income Tax System requires as a starting point (or it cannot know if it collected the correct amount of Flat Rate or Progressive Rate income tax), then that national government can intimidate you, pressure, brow-beat you, threaten you, totally control and subjugate you to the all-powerful state. This is the 2nd reason that Karl Marx made the Income Tax the 2nd Plank of The Communist Manifesto because it assures the supremacy of power flowing TO the all-powerful national state and FROM the disempowered individual system because income taxation (Flat or Progressive Rate) REQUIRES all of your personal financial information. The 1st reason is Marx’s 100% income tax on all income was the mechanical method of fulfilling the 1st Plank-the abolition of privately owned property to the all-powerful state. Comrade Mitchell apparently never read the personal diaries of the Founders where you’ll find their opposition and fear of income taxation. I’m appalled how Dan Mitchell says “at worse the Flat Tax will just degenerate back into the current multi-rate system”-OF COURSE IT WILL! The Lobbyi$ts are counting on that! They need all INCOME TAX deductions removed SO THEY CAN ADD THEM BACK FOR 7-FIGURE LOBBYING FEE$. Why the heck do you think they NEVER come home from Washington after they retire from Congress or The University of INCOME TAX Deduction Lobbyi$ts: The House Ways & Means and Senate Finance Committees? The Lobbyi$ts LOVE their ally Dan Mitchell!
Dan Mitchell: PLEASE leave CATO and go to K Street where you belong. Please. I cannot and will not WASTE ANY more money contributing to an alleged “libertarian” organization that sanctions the Income Tax that the Founding Fathers rejected as a violation of Personal Privacy, Personal Sovereignty and Transparency in Taxation (BECAUSE IT IS A HIDDEN PERSONAL CONSUMPTION TAX IN ITS FINAL FORM TO THE LAST BUYER IN THE TRANSACTION CHAIN). That is why they established an architecture from 1787-1913 (16th Amendment-The Income Tax) whereby the federal government was funded by CONSUMPTION taxes COLLECTED BY THE STATES AND REMITTED BY THE STATES to the U.S Treasury because they forbade the federal direct taxation of citizens in Article 1 of the Constitution. Frankly, all taxes in their final form touch the final buyer in life as embedded, hidden personal consumption taxes-they forensically must if they were a seller-levy. Their cost must get passed forward just as must mechanically occur with materials or labor. Therefore, the only question becomes are you going to continue our hidden, embedded, and regressive 22% personal consumption tax levied an final retail personal consumption called the United States Income Tax/Payroll Tax System; or, are you going to transform to a transparent, progressive personal consumption tax levied at final retail personal consumption called The Fair Tax? Both Constitutional-appellate attorneys and INCOME TAX Attorneys both say that no Flat Rate Income Tax bill can have in its language that a future Congress cannot add back the removed INCOME TAX deductions or removed rates BECAUSE THAT WOULD BE A 16TH Amendment violation; and, why the Income Tax is the Gift that Keeps on Giving to Congress allowing them to fund their re-election and hide their spending in the base price of all goods and services bought in final retail personal consumption. CLEARLY, Comrade Dan Mitchell wants to “keep the game alive” for his unannounced allies (whether Mitchell realizes it or not): The K Street Income Tax Deduction Lobbyi$t Industry-sadly a main donor base of the Establishment Republican Party who fraudulently calls themselves “Founding Fathers-Followers”.

The government is not the solution and is the problem. Stop…think…do you really expect different results from the same old actions? The solution is to change our tax code that punishes production, taxes on income, savings and investment. Without production there is nothing to buy, no improvement in standard of living, no tax base to support government. The solution is to repeal the 16th Amendment that enabled direct taxation on incomes and jobs, the IRS and tax withholding. When you are through dreaming and want a real solution stop bitching and take action!!! Support the FairTax, learn more at fairtax.org and start with Q&A, to more the tax base to consumption with a progressive national sales/consumption tax system.